Customer
Value or Customer Delivered Value is the difference between Total Customer
Value and Total Customer Cost. Customer Value = Product Value + Service Value +
Personnel Value + Image Value
Total
Customer Value is the bundle of benefits that the customers expect from a
given product or service.
Total
Customer Cost is the bundle of costs customers expect to incur in
evaluating, obtaining, using and disposing of the product or service. Total
Customer Cost = Monetary Cost + Time Cost + Energy Cost + Psychic Cost
Customers make
their purchases based on Customer Delivered Value or on the basis of value-price
ratio. Value – price ratio = Total Customer Value / Total Customer Cost
Seller who is
at a delivered value disadvantage has two alternatives:
Increase Total
Customer Value: strengthen product, service, personnel and image benefits
Decrease Total
Customer Cost.: reduce price, simplify ordering and processing process, absorb
buyers risk by offering warranty etc.
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